Goodman v. Olsen

• Decision Date: 07 November 1974
• Docket Number: No. 45356,45356
• Citation: 305 So.2d 753
• Parties: Saul GOODMAN, Petitioner, v. Richard H. OLSEN, Respondent.
• Court: Florida Supreme Court

Page 753

305 So.2d 753

Saul GOODMAN, Petitioner, v. Richard H. OLSEN, Respondent.

No. 45356.

Supreme Court of Florida.

Nov. 7, 1974.

Rehearing Denied Jan. 29, 1975.

Leo Greenfield of the Law Offices of Leo Greenfield, North Miami, and Frank Ragano, Tampa, for petitioner.

John W. Prunty, of Prunty, Ross, DeLoach & Olsen, Miami, for respondent.

McCAIN, Justice.

This cause is before the Court on a petition for writ of certiorari. We have jurisdiction pursuant to Article V, Section 3(b)(3), Florida Constitution.

The respondent, Olsen, an attorney from Florida, Prepared and executed an agreement in New York in which he stated that as per a 'joint venture' the petitioner, Goodman, was to advance the sum of $300,000 for the purchase of 50,000 shares of stock in Omega Equities, Incorporated, $150,000 of which was characterized as a loan to Olsen. Under the terms of the agreement, Goodman was to own 25,000 shares and Olsen was to own the other 25,000 shares which he pledged as collateral on the loan.

Olsen agreed to repay the $150,000 by a stipulated date, and further agreed to purchase the petitioner's 25,000 shares at $10.00 per share in the event that Goodman desired to sell on or before a stipulated date. In addition, Olsen agreed that in the event that he failed to pay the stipulated purchase price, he would be liable for any sum up to $10.00 per share upon the sale of Goodman's shares.

After the execution of this agreement by Olsen, Goodman gave Olsen a check in the amount of $300,000 and Olsen purchased the stock. Olsen had repaid approximately $60,000 of the $150,000 when this action was commenced in Dade County, Florida.

Goodman filed suit seeking not only the $90,000 balance remaining on the loan but further sought damages for breach of contract for failing to buy back the 25,000 shares of stock at $10.00 per share. Olsen defended by alleging that he had refused to buy back the stock only after he was advised that the contract was usurious.

The jury returned a verdict in favor of Olsen and upon appeal to the District Court of Appeal, Third District, that judgment was affirmed per curiam.

Before determining whether any error has been committed, it is first necessary to determine whether the Florida or New York usury statute is applicable. Then the agreement must be scrutinized to determine, under that choice of law, whether the agreement is usurious, and finally, if necessary, what remedies are applicable.

As to the first question, concerning the choice of law this Court in Wingold v. Horowitz, 292 So.2d 585, 586 (1974), citing from Brown v. Case, 80 Fla. 703, 86 So. 684 (1920), stated:

'The rule thus laid down by the Supreme Court of the United States was recognized by the Supreme Court of Florida as early as 1856.

'(1) 'The general principle adopted by civilized nations is, that the nature, validity and interpretation of contracts, are to be governed by the lex loci of the country where the contracts are made or are to be performed; but the remedies are to be governed by the lex fori.' Perry v. Lewis, 6 Fla. 555.'

Therefore, it is necessary to ascertain whether the agreement is usurious under the New York usury statute, since the validity of the agreement is governed by the lex loci contractus.

The general rule in New York is that a loan is usurious where the lender is entitled to the return of the principal and the full legal rate of interest plus a bonus to be paid upon a contingency over which the borrower has no control. This contingent right to a bonus must be something of value and when added to the maximum interest results in a total interest in excess of the legal rate. Webster v. Roe, 212 App.Div. 756, 210 N.Y.S. 366 (1925); aff'd, 241 N.Y. 570, 150 N.E. 559 (N.Y.1925); Moore v. Plaza Commercial Corp., 9 A.D.2d 223, 192 N.Y.S.2d 770 (1959), aff'd, 8 N.Y.2d 813, 202 N.Y.S.2d 321, 168 N.E.2d 390 (N.Y.1960); et seq.

However, an agreement to pay an amount which may be more or less than the legal interest, depending upon a reasonable contingency, is not Ipso facto usurious, because of the possibility that more than the legal interest will be paid. Hartley v. Eagle Ins. Co., 222 N.Y. 178, 118 N.E. 622 (1918); In re Bechtoldt's Estate, 159 Misc. 725, 289 N.Y.S. 838 (Surr.Ct., Clinton Co., 1936).

Additionally, a loan has been deemed not usurious where the money is in fact advanced for the purpose of a joint venture (Salter v. Havivi, 30 Misc.2d 251, 215 N.Y.S.2d 913 (Sup.Ct., N.Y.Co., 1961) or where there is No certainty that the bonus plus the stipulated interest will exceed the legally allowable rate of interest. Richardson v. Hughitt, 76 N.Y. 55 (1879); Cusick v. Ifshin, 70 Misc.2d 564, 334 N.Y.S.2d 106, aff'd, 73 Misc.2d 127, 341 N.Y.S.2d 280 (Sup.Ct.App.Term, 1973).

Under the terms of the written agreement, sub judice, the statement that the agreement is a 'joint venture' is not absolutely determinative of the issue, although this language contained in the agreement is an important factor to be considered in the determination of its character. The answer lies in the intent of the parties rather than the choice of language.

Notwithstanding, it is clear from the intent of the parties as reflected in...